Kuali Student Sunsetting $40 million project, moving to KualiCo

The changes with Kuali are accelerating, and there are some big updates on the strategy.

Earlier this week the Kuali Foundation distributed an Information Update obtained by e-Literate on many of the details of the transition to Kuali 2.0 and the addition of the for-profit KualiCo. Some of the key clarifications:

• KualiCo will be an independent C Corporation with a board of directors. KualiCo will not be a subsidiary of Kuali Foundation. Capital structure, equity allocations, and business plans are confidential and will not be shared publicly for the same reasons these things are rarely shared by private companies. The board of directors will start out with three members and will move to five or seven over time. Directors will include the CEO and an equal number of educational administrators and outside directors. One of the educational administrators will be appointed by the Kuali Foundation. Outside directors will be compensated with equity. Educational administrators will not be compensated in any way and could only serve as a director with the explicit permission of their university administration with attention to all relevant institutional policies.
• KualiCo’s only initial equity investor is the Kuali Foundation. The Kuali Foundation will invest up to $2M from the Foundation’s cash reserves. [snip] For its equity investment, the Kuali Foundation will have the right to designate a director on the KualiCo Board of Directors. The Kuali Foundation, through its director, will have an exceptional veto right to block the sale of the company, an IPO of the company or a change to the open source license. This helps ensure that KualiCo will stay focused on marketplace-winning products and services rather than on flipping the company on Wall Street.
• The Kuali Foundation is not licensing the Kuali software code for Kuali products to KualiCo as Kuali software is already fully open source and could be used by anyone for any purpose — as is already being done today. No license transfer or grant is needed by KualiCo or anyone else.
• The copyright for the AGPL3 software will be copyright KualiCo for the open source distribution that is available to everyone. It would very quickly become untenable to even try to manage multiple copyright lines as various sections of code evolve through the natural enhancement processes of an open source community.

One key point the document describes at length is the lack of financial interest from individuals in the Kuali Foundation and KualiCo, including the uncompensated director position, the lack of equity held by individuals outside of KualiCo, etc.

Two other key points that are particularly relevant to yesterday’s news:

• Each project board will decide if, when, to what extent, and for what term to engage with KualiCo. Project boards could decide to continue on as they currently do, to engage KualiCo in a limited way, or to allow KualiCo to help drive substantial change to the software approach to that product. If a project chooses not to engage KualiCo, KualiCo will have less initial funding to invest in enhancing the product, but will slowly build up those funds over time by hosting the product and enhancing the product for its customers. Choosing to engage with KualiCo in any fashion requires code to be reissued under the AGPL3 license (see Open Source section).
• KualiCo will be working with the Kuali community to make improvements to current Kuali products. In addition to enhancing the current codebase, KualiCo is beginning the re-write of Kuali products with a modern technology stack. The initial focus will be on Kuali Student and then HR. Complete rewrites of KFS and KC will likely not begin for 3-5 years.

Kuali Student Changes

With this in mind, yesterday the Kuali Student (KS) Project Board met and made the decision to sunset their current project and to transition to KualiCo development. Bob Cook, CIO at the University of Toronto and chair of the KS Project Board confirmed by email.

I can say that the Board adopted its resolution because it is excited about the opportunity that KualiCo presents for accelerating the delivery of high quality administrative services for use in higher education, and is eager to understand how to best align our knowledgeable project efforts to achieve that goal. [snip]

In recognition of the opportunity presented by the establishment of KualiCo as a new facet in the Kuali community, the Kuali Student Board has struck a working group to develop a plan for transitioning future development of Kuali Student by the KualiCo. The plan will be presented to the Board for consideration.

While Bob did not confirm the additional level of details I asked (“It would be premature to anticipate specific outcomes from a planning process that has not commenced”), my understanding is that it is safe to assume:

• Kuali Student will transition to AGPL license with KualiCo holding copyright;
• KualiCo will develop a new product roadmap based on recoding / additions for multi-tenant framework; and
• Some of all of the current KS development efforts will be shut down over the next month or two.

KS Project Director Rajiv Kaushik sent a note to the full KS team with more details:

KS Board met today and continued discussions on a transition to Kuali 2.0. That thread is still very active with most current investors moving in the Kuali 2.0 direction. In the meantime, UMD announced its intent to invest in Kuali 2.0 and to withdraw in 2 weeks from the current KS effort. Since this impacts all product streams, Sean, Mike and I are planning work over the next 2 weeks while we still have UMD on board. More to come on that tomorrow at the Sprint demo meeting.

I will update or correct this information as needed.

Kuali Student (KS) is the centerpiece of Kuali – it is the largest and most complex project and the most central value to higher education. KS was conceived in 2007. Unlike KFS, Coeus and Rice, Kuali Student was designed from the ground up. The full suite of modules within Kuali Student had been scheduled to be released between 2012 – 2015 in a single-tenant architecture. With the transition, there will be a new roadmap redeveloping for multi-tenant and updated technology stack.

Just how large has this project been? According to a financial analysis of 2009-2013 performed by instructional media + magic inc.1 Kuali Student had $30 million in expenditures in that 5-year span. The 2014 records are not yet available nor the 2007-8 records, but an educated guess is that the total is closer to $40 million.2

I mention this to show the scope of Kuali Student to date as well as the relative project size compared to other Kuali projects. I wrote a post on cloud computing around the LMS that might be relevant to the future KualiCo development, calling out how cloud technologies and services are driving down the cost of product development and time. In the case of the LMS, the difference has been close to an order of magnitude compared to the first generation:

Think about the implications – largely due to cloud technologies such as Amazon web services (which underpins Lore as well as Instructure and LoudCloud), a new learning platform can be designed in less than a year for a few million dollars. The current generation of enterprise LMS solutions often cost tens of millions of dollars (for example, WebCT raised $30M prior to 2000 to create its original LMS and scale to a solid market position, and raised a further $95M in 2000 alone), or product redesigns take many years to be released (for example, Sakai OAE took 3 years to go from concept to release 1.0). It no longer takes such large investments or extended timeframes to create a learning platform.

Cloud technologies are enabling a rapid escalation in the pace of innovation, and they are lowering the barriers to entry for markets such as learning platforms. Lore’s redesign in such a short timeframe gives a concrete example of how quickly systems can now be developed.

How will these dynamics apply to student information systems? Given the strong emphasis on workflow and detailed user functionality, I suspect that the differences will be less than for the LMS, but still significant. In other words, I would not see the redevelopment of Kuali Student to take anywhere close to $40 million or seven years, but I will be interested to see the new roadmap when it comes out.

This decision – moving Kuali Student to KualiCo – along with the foundation’s ability to hold on to the current community members (both institutions and commercial affiliates) will be the make-or-break bets that the Kuali Foundation has made with the move to Kuali 2.0. Stay tuned for more updates before the Kuali Days conference in November.

Say what you will about the move away from Community Source, Kuali is definitely not sitting on its laurels and being cautious. This redevelopment of Kuali Student with a new structure is bold and high-risk.